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Increased expenses, especially recycling costs, prompts Republic Services to seek a 12% rate increase in Woodburn

PMG PHOTO: JUSTIN MUCH - An increase in the costs of handling and disposing recycled material is part of the reason for the rising cost of curbside garbage service.Woodburn residents will see their garbage bills increase in 2020.

Representatives from Republic Services addressed the Woodburn City Council during its Tuesday, Nov. 12, meeting to apprise the city on its operation costs and a consequent need for a 12% rate increase.

Under the city's franchise agreement, Republic Services must demonstrate agreed-to criteria that justify rate increases. Any rate increase must then be approved by the city.

The Republic Services representatives, Municipal Public Relations Manager KJ Lewis, Finance Manager Will Mathias and Operations Manager Jay Lawson, presented the council with Power Point illustrations that itemized the company's expenses and delineated the need to increase rates.

"Our last rate increase was in 2016. At that time there was a large increase at the burner, which brought us in here," Mathias said, referring to the Covanta operation in Brooks. "And the request at that time was in the 12% range. Since that time our profitability has declined…from 8.4 percent down to 3.8 percent."COURTESY OF REPUBLIC SERVICES - The Republic Services rate increase will be 12% across the board.

Mathias said the rate increase is necessary to realign Republic Services profit margin with what is universally considered an adequate range in the waste management industry: between 8% and 12%.

"The increase that we are requesting gets us to the midpoint of that range by the end of 2020," Mathias said.

A report by Assistant City Administrator Jim Row noted that the last rate increase came in September of 2016 and bumped up residential service 10.2%, commercial 15.6% and industrial 11.2%. Additional increases for residential curbside services in recent years amounted to 8% in 2005, 4% in 2006, 6.6% in 2010, 3.2% in 2012 and 4% in 2014.COURTESY OF REPUBLIC SERVICES - Pie chart shows where waste-management money is spent.

"The increases in 2016 were substantial because the Marion County Board of Commissioners had recently adopted significant increases in solid waste disposal fees, including a 30% increase in the per-ton tipping fee for franchised garbage haulers," the report noted.

Continued increasing costs for disposal and recycling were among the expenses the Republic Service representatives underscored as prompting the current rate increase. One Power-Point table itemized increased expenses from 2017 and 2018 and included vehicle fuel/operating costs up 13.4%, insurance up 14.6%, and disposal and recycling up 15%.

Lewis attended a council meeting last June and spoke about mounting problems with recycling, presenting a Power Point titled "Recycling is Broken." The overarching message was China handled most of the US disposable waste as recently as a couple of years ago, and the country is no longer in the market for that "commodity." That means recycled materials must go somewhere else, be it another market or the landfill.COURTESY OF REPUBLIC SERVICES - Garbage rates for area cities compared.

Woodburn City Administrator Scott Derickson asked the representatives if there had been any change in that status.

"We know that the market for commodities just crashed and burned and became a (costly expense) for you the last couple years," Derickson said. "Do you see that recovering down the road or is that going to be an opportunity lost forever?"

Lewis indicated that recycling issues were in flux and difficult to pin down.

"Different markets are being found, and it changes all the time," Lewis said. "There are discussions at a higher level about developing new markets, even domestically. It is uncertain; it is unclear."

Mathias said he believed that the recycling market will stabilize.

Derickson also noted recent issues with the Covanta burner in Brooks, and if that shut down how could that affect costs?

Earlier this year the Brooks facility, which converts garbage and biomass into electricity, failed in its attempt to persuade state legislators that it should be designated as a source of renewable energy, thereby receiving tax credits befitting such designation. Covanta reportedly is making another bid to achieve that designation next year.

Lawson said that should the burner shut down, Republic Services does have "a contingency plan, so there wouldn't be any interruptions whatsoever."

"Would that contingency plan include any additional costs?" Derickson asked.

"At this point, I don't believe so," Lawson answered.

The council approved the increase unanimously. It becomes effective Jan. 1.

"This is one of the most awkward conversations we have as a city council," Councilor Eric Morris said. "Water is a very similar conversation. None of us wants to increase prices… They've laid out a good case for why it's necessary to do it…It's a compelling argument and we can't just ignore that."COURTESY OF REPUBLIC SERVICES - With three containers -- trash, recyclables and yard debris -- the rate increases for Woodburn will amount to 29 cents per lift.

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